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HOUSTON - Talen Energy Corporation (NASDAQ:TLN), a power generation company with a market capitalization of $12.05 billion, announced Thursday it has signed definitive agreements to acquire two combined-cycle gas-fired power plants for a net price of $3.5 billion after tax benefits, or approximately $3.8 billion gross. According to InvestingPro data, Talen currently generates annual revenue of $2.09 billion with a healthy gross margin of 27.65%.
The acquisition includes Caithness Energy’s Moxie Freedom Energy Center in Pennsylvania and Caithness Energy and BlackRock’s Guernsey Power Station in Ohio. Both facilities are located within the PJM power market.
According to the company, the transaction represents a 6.7x 2026 EV/EBITDA multiple and is expected to be immediately accretive to free cash flow per share by over 40% in 2026. InvestingPro analysis indicates that Talen maintains a FAIR financial health score of 2.37, suggesting solid operational stability. The company’s stock is currently trading near its InvestingPro Fair Value, indicating balanced market pricing.
"This acquisition enhances Talen’s fleet by selectively adding modern, highly efficient baseload H-class CCGTs in Talen’s key markets," said Mac McFarland, Talen President and Chief Executive Officer, in a press release statement.
The two plants have an average heat rate of 6,550 Btu/kWh and will increase Talen’s annual generation by 50% from approximately 40 TWh to 60 TWh. The facilities are located near the Marcellus and Utica shale formations with connections to primary natural gas pipelines.
Talen plans to issue approximately $3.8 billion in new debt to fund the acquisitions and refinance target debt. The company expects to maintain its leverage target of 3.5x or lower by year-end 2026.
Both transactions are expected to close in Q4 2025, subject to customary closing conditions including regulatory approvals from the Federal Energy Regulatory Commission and other agencies. Wall Street analysts maintain a Strong Buy consensus on Talen’s stock, with detailed analysis available in the comprehensive Pro Research Report, one of 1,400+ company deep-dives available exclusively on InvestingPro.
RBC Capital Markets and Citi are serving as co-lead financial advisors to Talen, while Lazard is acting as lead financial advisor to Caithness. Morgan Stanley & Co. LLC is the lead financial advisor to Global Infrastructure Partners, a part of BlackRock.
Talen Energy currently owns and operates approximately 10.7 gigawatts of power infrastructure in the United States, including 2.2 gigawatts of nuclear power.
In other recent news, Talen Energy has been the focus of multiple analyst updates and company announcements. UBS recently raised its price target for Talen Energy to $366 from $296, citing strong power fundamentals and the beneficial impact of its long-term contract with Amazon Web Services (AWS). Oppenheimer also increased its target to $315, highlighting an upsized power purchase agreement with AWS and potential data center deals. Jefferies, however, lowered its target to $326, pointing out potential risks associated with the upcoming PJM capacity auction. Despite the reduced target, Jefferies emphasized Talen’s attractive valuation and balance sheet flexibility.
Talen Energy’s recent maintenance outage at the Susquehanna Steam Electric Station has led to increased costs by $35 million, though the company’s financial guidance for 2025 remains unchanged. UBS also noted that the AWS agreement could enhance Talen’s ability to pursue additional generation assets. Meanwhile, Oppenheimer mentioned potential merger and acquisition opportunities that could expand Talen’s generation capacity. These developments reflect ongoing strategic moves and financial considerations within Talen Energy.
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